Repetition does not transform a lie into the truth.

August 13, 2008

In a previous post entitled United Kingdom franchise media: What soap?, I took exception with an article that appeared in the Eastern Daily Press called Flourishing franchises buck trend.

It riled me so much that I fired off an email questioning the credibility of the sources (franchise banker, British Franchise Association, consultant/salesman, etc.).

Perpetuating the falsehood (franchises survive longer and are more profitable than independent businesses) is dangerous. This specific misrepresentation was exploded due to the academic work of Timothy Bates and Scott Shane some 10 years ago. No credible scholar would make these statements.

Bob Purvin’s recently re-issued book The Franchise Fraud [Amazon reviews] directly addresses this distortion also.

There probably is no specific quality franchise research having to do with U.K. franchisee survivability. There isn’t any in Canada, Oz or New Zealand either. The only work credible work is from the U.S. but that’s okay: That is where franchising is created and exported.

I promised to report back if the deputy editor, Adam Aiken, contacted me. This is my sixth email I have sent to other UK business media asking them to stop simply re-typing the franchise industry’s always rosy media releases. All of the these have been ignored

To Adam’s credit, he actually wrote back and this is what he emailed me:

Thanks for this, Les.

I’ll include some of your comments on our new business blog and provide a link to your blog, if you’re interested . . .

Adam

I accepted his offer and thanked him as any polite Canadian would do in the situation.

Title courtesy of Franklin Delano Roosevelt.

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The Franchise Fraud by Robert Purvin

August 11, 2008

Bob Purvin’s book is a must read.

Don’t listen to Richard Solomon’s rants against Purvin and the American Association of Franchisees and Dealers. Richard needs a distemper shot.

In a Blue MauMau posting, Bob tries to explain what he meant by fraud:

Purvin explained it was a much bigger problem which he addressed in a book he wrote, The Franchise Fraud, which was republished recently. He told them that it wasn’t so much about the people that were out selling fraudulent deals, but that the franchising industry had painted a rosy picture about franchising. He said they tell you that when you buy a franchise you are reducing your odds for failure and dramatically increasing your odds of success, because everybody knows when you buy a franchise you buy a proven commodity. He said, “That’s false. Most franchises are much weaker than they appear to be. The blue chip list of franchise opportunities is a very short list.

He goes on to state that any legal protection is an illusion:

He also said that people believe that they are protected by a fabric of laws that would prevent them from being defrauded. “That also is false.” The point of his book was to wake up the buying masses that when they buy a franchise they have to be very careful and treat that purchase every bit as cautiously as the guy in the corner who says, do you want to buy my Rolex watch. Unfortunately, hundreds of thousands have been bitten by the franchise bug and can’t believe that they weren’t buying into a sure thing, Purvin said.

Sound advice from a real pro.

  1. Most franchise systems are unproven.
  2. The blue chip franchises are very few.
  3. There is no legal protection.
  4. Treat buying a franchise like you would buying a “genuine” Rolex on the street.
  5. Hundreds of thousands have been burned.

Read the book.


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